Sample dissertation proposal customer retention marketing Mobile telecommunications – A study of the customers of Three Mobile United Kingdom


Introduction

The following report is a proposal intending to conduct a dissertation on the subject of customer retention is in the mobile telecommunications industry. According to Buttle and Ang, (2004), customer retention can be considered as the final phase of a relationship management within which the first two stages are the customer acquisition and customer development. Many theories have been developed based on the benefits of increased levels of customer retention for any organisation. Several studies have propounded that increased levels of customer retention contributes to increased profits and revenue as well as the intangible benefits of customer loyalty contributing to long-term sustainability of the organisation. Moreover there is adequate data on the subject of the feasibility of customer retention for a mass-market service-based organisation in the mobile telecommunications sector. A mobile telecommunication service provider in any country has a large customer base and it is necessary to target those customers who are profitable or a long period of time and retain them. And effective retention strategy can offset the negative effects of the ups and downs in the market and can also be considered from the angle of barriers to the entry of new players in the market. But there are also suggestions on the lines of selective customer retention and also the concept of reducing those customers which are considered as unprofitable. For any organisation mainly in the service industry, there is a cost towards servicing the customers, even though this may be very insignificant or a mass-market organisation such as a company in the mobile telecommunications. But the cost incurred in servicing that segment of customers who are unprofitable or considered as contributing to a lesser share of the profit of the organisation is the loss of an opportunity cost to the organisation. Hence customer retention is not about the strategy of retaining all types of customers even though this may be the practice in many organisations. It is on this basis that the present report is written as a proposal to conduct a research on the following working title.

Working title

In order to conduct a feasible research and develop accurate conclusions it is necessary to focus on a particular subject area or a specific population. The main area of research is customer retention in the mobile telecommunication industry in the United Kingdom and it is proposed that a case study approach is adopted to conduct that research on the subject. Waste on this the following working title is adopted.

Customer retention strategies of the mobile telecommunication service organisations in the United Kingdom – A study of the customers of Three Mobile UK

But a mere study of the customer retention strategies will not provide any addition to the already available research literature since it is a widely studied area. Hence for the purposes of the research, the author wishes to focus on a specific area related to the effectiveness of the positive and negative retention strategies on the customers of the mobile telecommunication service organisation. On this basis the exact purpose for which the research will be undertaken is provided below.

Purpose of research

Customer retention strategy can be adopted or practised in a negative or positive manner and some of the research studies have indicated that negative retention strategies are much more effective in retaining a target customer base than positive retention strategies. According to Alamaro, (2011) negative retention strategy can be employed selectively on the target customers whom the company wants to retain for a longer term, but the positive retention strategies such as the provision of loyalty points and discounts has to be provided to every type of customer irrespective of the targeting. But it is quite possible to selectively applied positive and negative retention strategies so that the target segment of customers can be retained through a combined retention strategy. The effectiveness of the two types of retention strategy in different types of industries is considered to be different. The author when evaluating the literature on the subject of customer retention has found that the previous authors and researchers have evaluated that in some type of industries either the positive or negative retention strategy can only be applied. Moreover there is no significant study about the effectiveness of the retention strategies employed in the mobile telecommunications industry.

Research question

Based on the above what was the following research question has been developed which will be studied effectively and conclusively during the research process. The explanation and the rationale for selecting the research question follows.

  1. To critically evaluate the effectiveness of positive and negative strategies in increasing the retention ratio of customers

Positive retention strategies are considered to be fostering loyalty which according to Henning-Thurau and Hansen, (2000), is an attitudinal and behavioural concept. It has been suggested that a customer who is loyal to an organisation has a higher psychological barrier to defection and the loyalty developed from positive retention strategies are again considered to contribute to enhancing the propensity for future purchases by the same customer. This can be analysed by the success of up selling and cross selling of the products or services to an already existing customer from that of the new customer.

The negative retention strategies employed by organisations are essentially exit barriers or switching cost which unlike that of the positive retention strategy is indeed a cost to the customer. Whereas the positive retention strategy provided benefits for sustained use of the services or purchasing products from the same organisation, the negative retention strategy stalls the customer from defecting to another organisation by direct or indirect costs to be paid to the organisation or accrued by the customer in the case of switching. Several researchers have identified that the effect of switching cost is much more than the benefits from a loyalty program because the loyalty programs can provide benefits which may be financial or non-financial (tangible or intangible) and only in the future with continued usage of services or purchasing products. Whereas the negative retention strategy of exit barriers or switching cost is indeed a tangible element which forces the customer to continue using the same services or purchases the product from the same organisation.

The examples of the negative retention strategies or the exit barriers employed by the mobile telecommunications industry organisations are the exit fees which is the payment to be made to the company for cancelling the contract in the case of a contract customer and the lack of number portability in the case of a pay as you go customer. The positive retention strategies are the discounts provided to long-term contract customers when they renew their contracts after the expiry.

Based on the above the following aims and objectives of the proposed research is developed

Aims and objectives of research

The proposed research will aim to critically evaluate the concept of customer retention and the effectiveness of positive and negative retention strategies on the customers of the mobile telecommunication service organisations in the United Kingdom. Since a case study approach is utilised, Three Mobile which is a prominent service provider in the United Kingdom is selected for the study and the customers of Three Mobile will be the population under the study.

The objectives of the research are as follows

  1. To critically evaluate the concept of customer retention contributing to increased profitability and sustainable revenue generation.
  2. To analyse the effectiveness of positive and negative retention strategies employed by organisations in the mobile telecommunication service industry.
  3. To recommend a mix of positive and negative retention strategies to be employed by Three Mobile UK for its customers.

Scope of research

Customer retention strategies can be analysed from the perspective of the organisation as well as the customers. Or the proposed research study, the author plans to conduct primary data collection from the perspective of the customers of Three Mobile UK mainly because they are easily accessible and it is also necessary to evaluate their perceptions since the effectiveness of a particular retention strategy can only be analysed from the customer’s point of view. It is all so impracticable to consider data collection from the organisation mainly because of the confidentiality nature of the data about the specific practices adopted by an organisation to retain the profitable customers.

 

Background literature review

Two prominent researchers Francis Buttle and Lawrence Ang have contributed significantly to the development of the research literature available on the subject of customer retention. For the proposed research the author will be basing the theoretical models developed by the above-mentioned authors and will undertake a critical evaluation of their concept with the use of peer-reviewed literature. The classifications of customer retention strategies and some of their main descriptions are provided in the previous section. Since the main object is to analyse the effectiveness of positive and negative retention strategies, the author is providing relevant theoretical concepts about the studies conducted by previous researchers on the aspect of positive and negative retention strategy employed in different types of industries.

The positive retention strategy is considered that there was to the customer for continued patronage Alamaro, (2011) and negative retention strategy is the development of exit barriers or switching cost which either can be developed by the organisation itself or marketing induced (Buttle and Ang, 2004). According to Huber, (2008), a combination of positive and negative retention strategies are employed by many of the organisations but most of them do not evaluate a comparative assessment of or the effectiveness of the different types of practical aspects involved in the strategies. A research conducted by Oztayasi and Sezgin, (2011), have suggested that positive retention strategies are only effective after a long period of time mainly because of the loyalty creation concept employed in conjunction with such strategies. A further research by Tesform and Birch (2011) who conducted an empirical assessment of the frequent flyer program (loyalty program in the airline industry) it has been found that the effectiveness of providing a frequent flyer program in retaining profitable customers a significantly low. But there is contrary research on the same area of frequent flyer program conducted by Coyles and Gokey, (2005) who concluded that the frequent flyer program is an effective retention strategy to retain customers who use the airlines for their travels on a regular base than those customers who use airlines on an infrequent basis. A customer who uses frequent services of airlines can be considered as profitable and hence the effect of targeting this profitable segment of customers can be considered to be achieved by the frequent flyer program.

Some of the other researchers have evaluated and due to market conditions and the increasing competitive nature with which many this is organisations find themselves in, the effectiveness of positive retention strategies are diminishing (Buttle and Ang, 2006). According to Clayton-Smith, (1996) in many industry areas especially service-based organisations does not have a credible negative retention strategy. But when considering the mobile telecommunication service industry that the customer has to utilise the services of a particular company on a continuous and long-term basis, the effectiveness of positive and negative retention strategies have been emphasised by (Ahmad and Buttle, 2002). In other types of industries, where the customers do not use the services on a regular basis such as that of a hotel or an airline, there is no particular negative retention strategy that could be efficiently employed. According to Oztayasi and Sezgin, (2011), negative retention strategies can only be employed in the relationship based services and that too in the case of services which are used by the customers on a long-term and a continuous basis.

Some of the retention strategies employed by organisations of the discounts provided to contract customers by providing those discounted handsets, cheaper call rates etc. While these are the positive retention strategies, many organisations tries to convert the pay-as-you-go customer or prepaid customers to post-paid or contract customers in order to retain them for long by providing them with discounts and benefits similar to that of the existing customers. These discounts and benefits can be considered under customer acquisition and the similarity in the nature of the loyalty programs for the existing and new customers in fact reduces the effectiveness. On the contrary the negative retention strategy of the lack of number portability for a prepaid customer and the exist is to be provided to the organisation by a contract customer in the case of this continuing the contract in the middle are some of the effective negative retention strategies. The intended research is planning to evaluate such positive and negative retention strategies employed by Three Mobile UK and the customer perceptions relating to the effectiveness of such strategies.


Research methods

When considering the methodology to be adopted, it is necessary to provide the reader about the development of knowledge from the primary as well as the secondary data. The methodology in which a research needs to be conducted involves the philosophy of research, the approach and the strategy and for the proposed research, these are evaluated below.

Research philosophy

The two types of research philosophies are positivism and interpretivism although the concept of realism which combines positivism and interpretivism has also come into focus in the recent years. Positivism is the philosophy adopted by researchers who wants a strict enforcement of scientific principles in the development of knowledge (Saunders, Lewis and Thornhill, 2009). Interpretivism on the other hand tries to develop knowledge by interpreting the data and considers the background, the causes and effects of the phenomena or the variables involved in the research. The proposed study is in fact a comparison of the positive and negative retention strategies and in order to compare them it is necessary to conduct research in a scientific manner and hence it is proposed that the positivist philosophy be adopted.

Research approach

The two approaches towards the research are deductive and inductive (Saunders, Lewis and Thornhill, 2009). Deductive reasoning is theory or hypothesis testing and inductive reasoning is theory or hypothesis development (Saunders, Lewis and Thornhill, 2009). The proposed research will base itself on the theoretical concepts developed by previous researchers and will only evaluate or compare the positive and negative retention strategies. The main hypothetical question is about the effectiveness of the positive or negative retention strategies in the mobile telecommunication service industry. Hence the deductive reasoning or approach will be utilised for the proposed research.

Research strategy

Quantitative and qualitative research strategies can be employed and hence the proposed research will be adopting a positivist philosophy based on scientific principles, it is pertinent that a quantitative research strategy is employed. Quantitative research strategy will provide the researcher with the ability to collect data which is numerical informed and analyse them using statistical or mathematical techniques. Qualitative data will be subjective and hence may not be adequate in a comparison of the positive and negative retention strategies. Hence the proposed research will be undertaken using a quantitative research methodology.


Data collection

When coming to the data collection for the research, there will be primary data which will be collected from the customers of Three Mobile United Kingdom and secondary data will be mainly in the form of research articles and other industry data about the mobile telecommunications industry. The primary data as planned will be collected from a sample from the population which is the entire customer base of Three Mobile United Kingdom. Since the nature of the population will have to closely resemble the demographical characteristics of the population of the United Kingdom, it is planned that the researcher will adopt a convenient snowball sampling approach. The snowball sampling approach is intended to generate the respondents from the friends and associates of the researcher are the customers of Three Mobile United Kingdom. No other type of sampling will be effective as the population is larger and the researcher has limitations in terms of resources and time available for the study. As mentioned before quantitative strategies employed in data collection and hence a structured questionnaire will be utilised. The questionnaire will be evaluating the customer perceptions about the effectiveness of the positive and negative retention strategies and will be developed based on a likert scale. The questionnaire will be initially pilot tested to verify the validity and reliability of the research instrument. The other types of data collection methods such as interview will not be suitable mainly because that will only produce qualitative data. The researcher plans to approach the friends and colleagues who are the customers of three Mobile and survey them using the questionnaire. With a snowball sampling approach, it is intended that a minimum of hundred customers of three Mobile can the surveyed.

They data analysis will be conducted using statistical processes or particularly the correlation analysis. The main aim of the research is to analyse or compare the effectiveness of positive and negative retention strategies and hence a correlation approach will be utilised in order to compare the different types of positive and negative retention strategies and their effectiveness from the perception of the customers. The correlation method has been utilised by several other researchers in that comparison studies and has been considered as an effective statistical method.

There is also some level of secondary data needed to complete the research and particularly relating to the customer characteristics, changes in customer patterns etc. which can be collected from online resources. It is also intended that the financial resources and database will be analysed in order to evaluate the growth of three Mobile United Kingdom in the last several years in order to get an accurate picture of the potential of the company.

Limitations

At this stage of the proposal for the research, the author has identified several limitations. The main limitation is from the adoption of the convenient snowball sampling approach, which might limit the author’s ability to collect data from a sample with exactly resembles the demographic characteristics of the population. It is extremely difficult to generate or approach respondents through the snowball sampling approach which would be accurately coming under the demographic characteristics of the population. In order to reduce this limitation, the researcher plans to conduct a sampling of the sample data collected or in other words, the researcher will sample the data collected in order to analyse that respondents which resembles the population. Any type of repetition of the demographical characteristics will be neglected. Another limitation is with the questionnaire of the survey method to be employed. In order to verify the validity and reliability of the questionnaire, the researcher is planning to conduct a pilot study. During the pilot study the author will collect the comments and analyse the responses in order to verify that the research instrument is accurately measuring the variables which is supposed to measure and is providing reliable data for analysis.

Ethical aspects

An important ethical consideration which will come up during the research process and particularly during the primary data collection will be of any negative consequences to the respondents due to the participation in the survey. In order to reduce or minimise such ethical aspects, the researcher plans to adopt a strategy of appraising all the possible respondents about the nature of the research and the aims and objectives. Along with the survey questionnaire, the researcher will provide a printed sheet which provides the respondents with full details of the survey and the way in which the results will be published. This will also act as a consent form. The researcher further undertakes that no coercion or other unethical practice will be employed in the collection of data.

Plan of research process

Task

Wk 1

Wk 2

Wk 3

Wk 4

Wk 5

Wk 6

Wk 7

Wk 8

Wk 9

Wk 10

Wk 11

Wk 12

Introduction

Literature review

Methodology

Submission of draft

Corrections and changes

Survey

Data analysis

Discussions

Submission of draft

Corrections and changes

Conclusions and recommendations

Final submission

 

 

Conclusion

This report was a proposal for a research to be conducted on the concept of customer retention in the mobile telecommunication service industry in the United Kingdom. During the initial part of the report, the purpose, the working title, and the research questions were evaluated and in order to focus the research area is intended that the study will be conducted on the effectiveness of Austin and customer retention strategies employed by three mobile United Kingdom. The research will be conducted using primary data collected from the customers of the company using a convenient snowball sampling approach. The philosophy that will be adopted will be positivist with deductive approach and quantitative research strategy. A survey method will be adopted in order to collect the primary data. It is intended that the research will provide conclusions as to what type of retention strategies are effective in customer retention.


References

  1. Ahmad, R. and Buttle, F., (2002) “Customer retention management: a reflection of theory and practice”, Marketing Intelligence & Planning, Vol. 20 Iss: 3, pp.149 – 161
  2. Alamaro, A., (2011), Antecedents of brand preference for mobile telecommunications services, Journal of product and brand management, volume 20, issue 6, pages 475 to 486.
  3. Buttle, F. and Ang, L., (2004), Management competencies for successful customer retention, Macquarie graduate school of management.
  4. Buttle, F. and Ang, L., (2006) “Customer retention management processes: A quantitative study”, European Journal of Marketing, Vol. 40 Iss: 1/2, pp.83 – 99
  5. Clayton-Smith, D., (1996) “Do It All’s loyalty programme – and its impact on customer retention”, Managing Service Quality, Vol. 6 Iss: 5, pp.33 – 37
  6. Coyles, S. and Gokey, T. C., (2005) “Customer retention is not enough”, Journal of Consumer Marketing, Vol. 22 Iss: 2, pp.101 – 105
  7. Gould, B, (1998) “The rise, fall and return or customer retention at MCI”, Antidote, The, Vol. 3 Iss: 5, pp.40 – 40
  8. Henning-Thurau, T. and Hansen, U., (2000), Relationship marketing; gaining competitive advantage through customer satisfaction and customer retention, Springer publications Ltd.
  9. Huber, M., (2008), From customer retention to a holistic stakeholder management system; leading innovation, Springer publications Ltd.
  10. Oztayasi, B. and Sezgin, S., (2011), A measurement tool for customers relationship management process, Industrial management and data systems, volume and 11, issue six, pages 943 to 960.
  11. Saunders, M., Lewis, P. and Thornhill, A., (2009), Research methods for business students, Pearson education publications Ltd.
  12. Tesform, G. and Birch, N. J., (2011), Do switching barriers in the retail banking industry influence and customers in different age groups differently, Journal of services marketing, volume 25, issue 5, pages 371 to 380.